Correlation Between Teton Westwood and State Street

Can any of the company-specific risk be diversified away by investing in both Teton Westwood and State Street at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Teton Westwood and State Street into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teton Westwood Small and State Street Institutional, you can compare the effects of market volatilities on Teton Westwood and State Street and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Teton Westwood with a short position of State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teton Westwood and State Street.

Diversification Opportunities for Teton Westwood and State Street

0.95

Correlation Coefficient

Teton Westwood  State Street

Almost no diversification

The 3 months correlation between Teton and State is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Teton Westwood Small and State Street Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Institu and Teton Westwood is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Teton Westwood Small are associated (or correlated) with State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Institu has no effect on the direction of Teton Westwood i.e., Teton Westwood and State Street go up and down completely randomly.

Pair Corralation between Teton Westwood and State Street

Assuming the 90 days horizon Teton Westwood Small is expected to under-perform the State Street. In addition to that, Teton Westwood is 1.15 times more volatile than State Street Institutional. It trades about -0.09 of its total potential returns per unit of risk. State Street Institutional is currently generating about -0.09 per unit of volatility. If you would invest  1,238  in State Street Institutional on December 27, 2024 and sell it today you would lose (66.00) from holding State Street Institutional or give up 5.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Teton Westwood Small  vs.  State Street Institutional

Teton Westwood Small

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teton Westwood Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

State Street Institu

Risk-Adjusted Performance

Very Weak

Over the last 90 days State Street Institutional has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, State Street is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Teton Westwood and State Street

The main advantage of trading using opposite Teton Westwood and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teton Westwood position performs unexpectedly, State Street can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in State Street will offset losses from the drop in State Street's long position.

The idea behind Teton Westwood Small and State Street Institutional pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..